For the purposes of the European Communities Transfer of Undertakings (Protection of Employment) Regulations 2003 ("TUPE"), the dismissal of an employee will be automatically unfair if the sole or principal reason for the dismissal is the transfer, unless it can be shown that the dismissal is for an economic, technical or organisational reason entailing changes in the workforce.
The Court of Appeal of England and Wales recently confirmed, in Hare Wines Ltd v Kaur, that in circumstances where a dismissal occurs shortly before a transfer, the existence of purely personal reasons for the dismissal will not preclude the transfer being the reason for the dismissal.
Mrs Kaur was employed by H&M Wholesale Limited and was dismissed two days before the business was transferred to Hare Wines Ltd. Mrs Kaur bought a claim for unfair dismissal and the UK Employment Tribunal found that the motivating factor for her dismissal was her difficult working relationship with another employee who would become her supervisor following the transfer. However, due to the proximity of the dismissal to the transfer, the Tribunal found the real reason for the dismissal was in fact the transfer and therefore the dismissal was automatically unfair. Hare Wines appealed the decision, claiming that the Tribunal had failed to properly apply the test for automatic unfair dismissal or that the Tribunal had erred in concluding that the "sole or principal reason" for the dismissal was the transfer.
Decision of the UK Employment Appeals Tribunal
The UK Employment Appeals Tribunal upheld the Tribunal's decision. It stated that, when deciding whether a TUPE transfer is the sole or principal reason for a dismissal, the Tribunal must have regard to all of the circumstances. Although the difficulties between Mrs Kaur and her supervisor might have been a motivation for the dismissal, these issues had been long-standing and her employer had previously taken no action to resolve them. It was likely that, were it not for the transfer, Mrs Kaur would not have been dismissed. Therefore, the Tribunal had not erred in concluding that the sole or principal reason for the dismissal had indeed been the transfer. This decision was appealed to the Court of Appeal.
Decision of the Court of Appeal
The Court of Appeal held that, if an employee is dismissed just prior to the transfer of an undertaking because the transferee does not want the employee on the books for personal reasons, including because of a poor working relationship with another member of staff, it may still be said that the principal reason for the dismissal is the transfer, and therefore an automatically unfair dismissal.
Whether a transfer is the sole or principal reason for a dismissal will be a question of fact in each case. However, the fact that there is a personal reason for a dismissal will not prevent a court or other employment adjudication body from finding that the sole or principal reason for the dismissal is the transfer.
This case highlights that even where an employer has reasons other than the transfer for a dismissal, caution should be exercised if the dismissal is carried out close to a transfer date.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.